Spain: Labor Rights Overhaul Announced by Prime Minister

The leader of the Spanish Socialist Party (PSOE), Pedro Sánchez, became the designated prime minister of Spain after battling his predecessor, Mariano Rajoy, on the counts of a corruption scandal. This change in leaders paves the way for a new era in labor right for Spain, EU’s fourth largest country.

The Decision to Overhaul Previous Regimes Labor Rights

On July 17th of this year, during his parliamentary address, Prime Minister Pedro Sánchez announced a labor policy that promises reforms of the country’s labor rights laws, originally implemented by his more conservative predecessors.

According to Sánchez, Spain continues to face the never-ending issue of low wages that comes as a result of both a weak evolution of the country’s productivity and the declining bargaining power of workers that was initially favored by the labor reforms of the previous government.

The Fight for Wage Hikes, Gender Pay Gaps, and Temporary Employment

Weeks after the conservative Popular Party was overthrown through a no-confidence parliamentary vote, Sánchez set the tone with new labor and employment priorities that would mark his new legislative session that will come to an end in 2020. The priorities promised by Sánchez include:

Wage Hikes and Growth

At the top of the Prime Minister’s agenda are several proposals that push for wage hikes and equal wealth distribution between a worker’s wage earner income and a company’s profits. Sánchez supports the Employment and Collective Bargaining Agreement signed by employer and labor unions on July 5 in order to gradually raise the annual minimum wage to 14,000 euros ($16,400) by 2020.

Narrowing the Gender Wage Gap

While addressing the matter of gender wage gaps, Sánchez said his “feminist” government would likewise support parliamentary debate of bills to address wage disparity between men and women.

Support for active employment policies

During his address, Sánchez heavily borrowed language from proposed bills by the leftist Unidos Podemos group. The language covers the proposed law against Job Insecurity and for Employment Stability that would regulate conditions and time periods for the temporary hiring of workers.

Introduction of the Youth in the Labor Market and the Fight against Exploitation

Sánchez promised that by the end of July 2018 his government will approve a Master Plan against Worker Exploitation to “eradicate deregulation of working conditions and job insecurity.” This will include a “shock plan” to combat the fraudulent use of freelancers and temporary workers, as well as separate moves to combat illegal overtime and end ”discrimination for reasons of gender, race, age, etc.”

Employment Duality

As per the Country Report No. 18/223 released July 19, the IMF said Spain’s priority should be to address “labor market duality” and “reduce labor market segmentation by improving the attractiveness of open-ended contracts and reducing administrative and legal obstacles that add to the cost of such contracts.” Sánchez highlighted the fact that it is clear from Spain’s current productive model, both temporary and stable job contracts are necessary. Therefore, one of his main agendas is to create a balance and promote employment duality.

Striking of language from the criminalizing penal code that targets employees who go on strike to fight for their rights

The Sánchez government will also aim to eliminate Article 315.3 of the Penal Code, which dictates prison sentences of up to three years for those who individually or collectively “coerce other people to initiate or continue a strike.”

Effects of the Labor Rights Overhaul

As Sánchez takes office, so do his new political parties which have stood their ground and committed to the long-sought fight to overturn the employment reforms that were implemented in Spain in February 2012.

Due to this, employers in Spain are likely to experience increased security and employment costs, such as:

Increased severance payments – The amount of compensation payable by employers for unfair dismissals may be increased by more than a quarter to 45 days’ salary per year of service, from the current 33.

Redundancy – Currently, a dismissal is treated as a redundancy if it is based on “economic, technical, organizational or production” reasons. The new government may tighten the criteria and make it even harder for businesses to make employees redundant.

Reduced flexibility to change terms and conditions of employment – Employers may not have the ability to reduce salaries in redundancy situations without first obtaining employee consent.

Stronger collective bargaining – Historically, if an employer was unable to reach agreement on the terms of a new collective agreement, the provisions of the old agreement would remain in force indefinitely. This position may be reinstated.

Interim wages – Prior to the 2012 reforms, if an employee was dismissed and the dismissal was found to be unfair, an employer was required to pay severance pay and either reinstate the employee or pay him wages from the date of dismissal to the date of the judge’s ruling. The right to an interim wages payment was abolished in 2012 but may be re-introduced.

The Fate of Said Promises

Although Sanchez has made many promises, the fruition of these promises and success of Sánchez’s minority government is yet to be determined. This is because Spain’s broken political landscape requires socialist groups to gain the support of the Unidos Podemos group, amongst other national groups in order for them to implement any new laws and bring about actual change.

Seeing as the parliamentary majority is still the same as it was before the election, it is expected that advancements will be slow in terms of advancing specific regulations.

All in all, the appointing of Pedro Sánchez as Prime Minister has come with a host of new labor laws that significantly differ with Mariano Rajoy. From fighting against exploitation, to laws pushing for the support of active employment policies and the introduction of the youth into labor markets, narrowing the gender wage gap, hiking wages, and lastly, those striking language from the penal code that criminalizes employee strikes, the new labor regime is expected to work with the needs and development with employees at the center.